Tesla Plays Heads or Tails by Teaming Up with Chinese Manufacturers

It was suspected that Chinese manufacturers would soon challenge European sanctions, but not necessarily Tesla.

Even though Tesla has no legitimate reason to support Europe in its economic crusade against China, the American manufacturer is playing with fire by siding with Chinese producers against the old continent. By contesting the anti-subsidy tariffs imposed on Chinese electric vehicles, the American giant aligns itself with players like BYD, SAIC, and Geely, perhaps forgetting a bit too quickly the advantages it received for its establishment in Europe. The Berlin Gigafactory, key to its expansion, benefited from generous financial and regulatory support from European authorities. It’s an indisputable win-win partnership, but by taking the side of Chinese manufacturers, Tesla seems to be biting the hand that fed it.

It should be kept in mind that Tesla was rather spared by Brussels, as these tariffs, introduced in October, impose a reasonable additional tax of 7.8% on it, compared to up to 35.3% for other manufacturers, in addition to the standard import duty of 10%. This is normal because while the Teslas from Shanghai are built under the same conditions as the Chinese models, these customs fees primarily aim to counter the massive subsidies that China grants to its manufacturers. The European Commission has promised to firmly defend these measures, and Tesla has chosen to join the legal actions filed by Chinese groups and the Chinese Chamber of Commerce. This decision could weaken its relations with the European Union, which remains a strategic market for the manufacturer.

Tesla must nurture its alliances

Should this be seen as an implicit acknowledgment by Tesla? By contesting these barriers, the company perhaps recognizes that it is simpler and more profitable to produce the models intended for Europe in China. This approach raises questions about its long-term vision, especially as it faces increasing competition and a decline in deliveries in 2024. While a rebound is expected in 2025 with the launch of the restyled Model Y and potentially a more affordable model, Tesla risks further tarnishing an already damaged image due to the antics of its turbulent CEO Elon Musk.

Supporting Chinese manufacturers against Europe is a risky strategy. In a context of growing trade tensions, Tesla is playing a dangerous game that could jeopardize its future in a region where it remains heavily established thanks to the support of those it is challenging today.

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